What's up guys and welcome back to wall street millennial on this channel, we cover everything related to stocks and investing hedge funds are some of the most secretive and sophisticated entities in the financial world. They spend tens, or even hundreds of millions of dollars per year on expert networks and proprietary data sources which give them an edge over retail investors. The top hedge fund managers amassed tens of billions of dollars from investors and can make billions from performance fees. One of the most successful hedge fund managers of the past decade has been chase coleman, the founder and ceo of tiger global, with an estimated 95 billion dollars of assets under management across its various funds.

Tiger global is the eighth largest hedge fund in the world. The fund's swelling assets has translated to coleman's growing net worth in 2020. He was the highest paid hedge fund manager in the world raking in an eye watering 3 billion dollars. This brought net worth up to 10 billion dollars.

Tiger global had turned into a multinational organization, with over 200 employees across offices in new york, hong kong, beijing, singapore and bangalore, and, with a 20-year track record of crushing the s, p 500 coleman looked unstoppable. Unfortunately, for coleman and his investors, all good things must come to an end since the beginning of 2022, his two main public equity funds have crashed by 44 and 48 respectively, wiping out more than all the gains they've made in the past two years. In just four months, they've managed to burn tens of billions of their investors. Money which include pension funds for teachers and firefighters, behind the facade of sophistication, coleman's portfolio was extremely risky and speculative.

While this created tremendous gains, when times were good as soon as the market conditions reversed, it all crashed down like a house of cards in this video, we'll look at how tiger global rose to the top of the financial world and how it all came crumbling down. Coleman got his start in the hedge fund world in the late 1990s, by working for tiger management run by the legendary hedge fund manager, julian robertson, robertson is considered to be the godfather of modern hedge funds. His idea was to identify high quality companies and buy their shares and also identify low quality or overvalued companies to sell their shares short if you're good, at differentiating between good and bad companies. Your longs should do better than your shorts and your portfolio will appreciate, regardless of market conditions.

This strategy worked extremely well throughout the 1980s and 90s, and its hedge fund grew to 20 billion dollars of assets under management, making it the largest hedge fund in the world. At the time in 1999, julian started shorting shares of highflying.com companies because he knew that they were overvalued and made them had deeply flawed business models. Unfortunately, the market can stay irrational longer than you can say solvent. He lost so much money on his short positions that he was forced to shut down his hedge fund right before the bubble popped a few years before tiger management blew up julian hired a young man by the name of chase coleman to analyze technology stocks.

Robertson saw great potential in him and after shutting down tiger management, he gave coleman 25 million dollars of startup capital to launch his own new fund coleman named the new fund tiger global and focused primarily on technology's talks. Coleman saw tremendous opportunities for disruptive technology to revolutionize. Many parts of the economy not wanting to repeat the mistakes of his former boss. He went long shares of high growth technology companies instead of shorting them tiger global started, operating almost right after the tech bubble collapsed, which gave him a massive opportunity to load up on promising technology stocks which are thrown out with the bath water.

He was also one of the first western investors to see the potential in chinese internet companies, as this was a very new market at the time over the next 20 years. Coleman would make outsized gains on his wealth-picked technology stocks. Making 20 analyzed returns on average, which is almost double the s. P 500., with such a stellar track record high net worth individuals and pension funds were lining up to invest, giving tiger global tens of billions of dollars in new capital when the pandemic hit in early 2020.

Coleman saw the tremendous opportunity for companies that made work from home technologies. He told his analysts to look at publicly traded companies from around the world that stood to benefit the most from the lockdown economy, informed his portfolio on that basis. For example, one of their major holdings was ring. Central ring central is a cloud-based software company that allows companies to manage phone calls both internally and with their customers with employees forced to work from home.

They had to rely on calling each other to communicate. Instead of talking face-to-face in the office demand for ring central's product skyrocketed and the share price almost doubled, with many consumers, aware of going to brick and mortar stores during the pandemic, e-commerce adoption accelerated substantially having extensive experience investing in chinese stocks tiger global built, a large Stake in chinese e-commerce company pin duo duo, which saw its share price increase five-fold. It was a similar story with c limited, the largest e-commerce company in southeast asia from 2020 to its peak. Two years later, the stock was almost a 10 bagger.

Almost every one of his picks was a slam dunk and by the end of 2020. Their public equity fund had appreciated by 48, absolutely crushing the s p 500, which returned 16 similar to how kathy would achieve legendary status among retail investors for the performance of her arc. Etfs coleman gained similar prestige amongst institutional investors for the performance of his hedge fund and their strategies were very similar. Both went all-in on coveted beneficiary technology stocks that saw triple digit growth, paying little attention to valuations of the fact that many of these companies were still losing money.

There was a lot of overlap between coleman's and woods holdings, but coleman was able to pocket far more of the gains for himself because of the hedge fund's fee structure, the managers get 20 percent of the portfolio's gains. He went home with 3 billion dollars of performance fees, making him the single highest paid hedge fund manager in the world, 2021, wasn't quite as good for them. They had some exposure to chinese internet stocks which suffered from the government's crackdowns. Luckily, this exposure was limited and they ended the year with a seven percent loss.

While this isn't great, their investors were willing to give them a pass, because their performance was so good in 2020. But little did they know. The pain was just beginning, while they made some adjustments to their portfolio, they remained very overweight, high-growth technology stocks and pandemic beneficiaries. They seem to believe that kovit accelerated, pre-existing technology trends, so these companies should be able to continue to grow even in the post-covet world.

They also didn't seem to be concerned about skyrocketing inflation, the fed raising interest rates and the crushing effect that this could have on growth stocks like a deer in front of headlights, they just doubled down on their strategy of buying high multiple growth stocks, hoping that their Past success would repeat, as the feds started, raising interest rates. Their stocks started getting crushed like souffles under sledgehammers. They have two main public equity funds, a long short fund which both buys and short sells stocks, as well as a long only fund. In theory.

The long short fund should be protected from market crashes, because the profits from your short position should offset the gains from your longs, but that was not the case for tiger global. In the past four months, their long short fund has fallen by 44 and their long only fund has fallen by 48. The short positions in the long short fund only predicted the downside by four percent. This indicates that his long positions were far more vulnerable to the fed's rate hikes than the short positions which defeats the whole purpose of a long short portfolio.

His single worst performing position was carvana, which declined by a gut-wrenching 80 percent. Carvana is an online platform for people to buy and sell used cars they're best known for their massive automobile vending machines after the pandemic supply chain issues reduce the supply of new cars, forcing people to buy used cars instead, the problem is supply. Chain issues are now making it more difficult for them to source used cars and they can't meet demand despite their impressive revenue, growth they're still burning cash and reporting net losses. In most quarters, the stock has fallen by almost 90 percent, giving up more than all of its pandemic gains.

Another one of their big losers was ceo limited, which they had owned since at least 2020.. They made billions of dollars of unrealized gains as the stock was inflating during 2020. However, instead of taking profits, they doubled and tripled down on the position losing almost all of their gains. Sia owns shopee, which is the largest ecommerce platform in southeast asia.

In an effort to gain market share, they spent heavily on marketing and kept platform fees very low. While this strategy was successful at driving revenue growth they're still years away from profitability, they also own a fortnight-like game called guarena free fire. This exploded in popularity during the pandemic, as people were forced to stay at home, but revenue growth has since moderated most of tiger global's. Other holdings have similar stories.

They were pumped up to insane valuations during the fed induced coveted bubble. They naively thought that the growth would continue forever, so they doubled down now they're, finally, paying the price, in addition to investing in public equity funds, tiger global also invest in privately held technology startups. Today, their venture capital funds manage about 40 billion dollars. The disastrous 48 decline is only within their public equity fund.

It's easy to assess the performance of a public equity fund, because you can see the prices of each stock every single day and calculate the value of the entire portfolio. The value of a venture capital portfolio is much more difficult to estimate because you don't have a share price to look at while we don't know for sure how the performance of tiger's venture capital firm has been this year. There's strong reason to believe that it's even more disastrous than their public equities over the years they've grown their venture capital business rapidly. They've raised tens of billions of dollars from investors and tried to deploy this cash as quickly as possible.

In 2021, it was estimated that they have invested in 340 startups or almost one investment per day in a rush to get as many deals done as possible tigers. Investment analysts do very little due diligence and sometimes agree to make investments in companies. After just one phone call with the founders tiger, global has become something of a meme within the venture capital community, as they are willing to pay egregiously high valuations for speculative tech startups. After doing almost zero due diligence, in fact, some even speculate that they intentionally overpay for their deals to push the valuation up and price out rival venture capitalists.

Their investment strategy is very similar to that of softbank. In this regard. In the past, their venture capital funds have done pretty well because they got lucky with early investments in roadblocks, peloton and a few other companies which eventually went public at much higher valuations. But now it looks like their lazy and reckless investment philosophy is finally coming back to bite them.

Tiger recently invested hundreds of millions of dollars into an indian fintech company called bharat valuing the company at almost 3 billion. This is 3 times greater than the 900 million valuation that the firm had just six months earlier. Just a few months after taking tiger's money, barab started an internal investigation into co-founder and managing director ashner grover. The investigation found that he and his family members committed massive fraud and siphon money from the company's bank accounts for themselves.

Had tiger global's analysts done even the most basic of due diligence. They may have been able to avoid this disaster, while private companies aren't marked to market each day. Their valuations should track similar companies that are publicly traded substantially. All of tiger global's venture capital investments are in highly speculative cash burning machines, given that the bubble stocks are down 50 this year on average tiger's private portfolio has probably done even worse when you consider their history of overpaying for deals.

Chase coleman built up his reputation as a king of hedge fund managers, but in reality he's nothing more than a naive momentum. Investor who thinks his tech stocks can only go up. He got lucky over the past few years with the unprecedented tech bull run, both in the public and private markets with ever expanding price to sales ratios it'd be very difficult to not make money as a tech investor. Now that the fed has finally taken away the punch bowl, it's clear to see that the emperor has no clothes chase coleman started off his career working for julian robertson's hedge fund tiger management in the 1990s, while both tiger management and tiger global have now both failed.

They fell for the exact opposite reasons. Julian robertson was short, the tech bubble as it inflated chase coleman, was long the bubble when it popped. This shows that, whatever your investment strategy, it's always possible to suffer catastrophic losses. If the market turns against you, in 2020 alone, chase coleman took home 3 billion dollars of performance fees.

Now all this performance has been wiped out, despite this coleman is not obligated to give back one penny of it. Alright, guys that wraps it up for this video. What do you think about tiger global? Will they be able to make a comeback or is it over for them? Let us know in the comments section below, as always. Thank you so much for watching and we'll see you in the next one wall, street millennial, signing out.

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